Gulf Aircon Systems LLC (GAS) is budgeting its cash inflow from forecasting sales. The firm sells its aircon units, (i)

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Gulf Aircon Systems Llc Gas Is Budgeting Its Cash Inflow From Forecasting Sales The Firm Sells Its Aircon Units I 1 (41.4 KiB) Viewed 8 times

Gulf Aircon Systems LLC (GAS) is budgeting its cash inflow from forecasting sales. The firm sells its aircon units, (i) to new home/apartment owners, (ii) to existing GAS customers that are replacing their aircon units and also, () to new customers that are replacing other companies' aircon systems with GAS units. Each of the GAS aircon systems are sold for $2,000 per unit. GAS sells replacement units (whether replacing their own or other companies' units) on a cash basis, which reflects 60% of cash inflow from sales, New units are sold on credit, reflecting 40% of cash inflow from sales, with three-quarters (3/4) of the sales sold in 1 months' time and one-quarter (1/4) of the sales sold in 2 months' time. GAS estimates for Jan. 2020 sales: • 320 new home permits requiring installation of aircon units in Jan. 2020, are budgeted with a 25% success rate for new GAS units, given historical internal company data. • 110 GAS systems are estimated to be replaced in Jan. 2020 and are budgeted with an 90% sales rate for replacement by GAS units 210 other companies' systems are estimated to be replaced in Jan. 2020 and are budgeted with a 10% sale rate for replacement by GAS units. 1. Provide a breakdown of the number of units from new sales, GAS replacement sales for existing customers and GAS replacement sales of other companies, and also provide the total number of units sold, for Jan. 2020. (2 Marks) 2. Provide a breakdown of cash inflow from replacement sales on a cash basis for Jan. 2020 sales. (2 Marks) 3. Provide a breakdown of cash inflow in Feb. 2020 and Mar. 2020 for new units based on new home sales sold on a credit basis from Jan. 2020 sales. (2 Marks) 4. Provide a breakdown of cash inflow in Jan. 2020 from new home sales on a credit basis from Nov. 2019 and Dec. 2019 sales. (2 Marks) 5. From the above answers in (1) to (4), summarize your cash budgeting findings from forecasted sales, by completing the empty boxes (marked "?") in the following table, and calculate the total cash flows from Jan. to Mar. 2020. (2 Marks) Forecasted Sales Total Forecasted Sales (Units) Replacement (60%) New (40%)-One month prior (3/4) New (40%) - Two months prior (1/4) Total Cash Flow Nov. 2019 Dec. 2019 Jan. 2020 Feb. 2020 Mar. 2020 210 140 160 180 $252,000 $168,000 $126,000 ?$192,000 $216,000 ? $96,000 2 ?$28,000 ? ?